Obviously, unless we insist humans are devoid of free will and intent, of the ability to plan, to desire particular outcomes they can imagine bringing about, we need to explore the former possibility; putting a free market together on purpose, in a part planned, part ad hoc manner. How have humans done this, how have markets come to be and in what sense might they be considered free?
(In this exploratory exercise I’m leaving aside the differences between price-control by the state in a planned economy, and the ‘floating prices’ of ‘free’ markets, because the word “free” implies, purposefully I feel, an untruth. Corporations plan, of course – they are not price takers – and cartels plan in concert, all it takes is power to control prices, not just a government. Furthermore, The Market’s favourite nemesis, The State, can’t not be involved. And calls across the western world by lobbyists (interference in the state, perhaps?) for further market deregulation are not directed at socialist governments. For these reasons and others, it is clear ad nauseum use of the word “free” serves a clever deception in obvious need of piercing. (As a side note, see Steve Keen’s “Debunking Economics” for a thorough debunking of supply and demand price determination.))
Let’s go back to a notional ‘beginning,’ and consider which circumstances might give rise to market activities. First, groups of people must come together to trade, to want to inter-operate in a market of some kind. This is highly unlikely to be accidental. Without this deliberate ‘coming together’ there can be no market, thus, we can already state that a social impulse is a prerequisite for markets. In their simplest form markets cannot be 'value free.'
Let’s look a little deeper into the prerequisites. In order to want to trade at a market, people must:
1. have stuff they neither need nor want;
2. want or need things they cannot make or find lying around; and
3. know they have a very good chance of finding what they’re looking for, where the market is.
For example, you already have a table and don’t need another one. Why would you build another? To trade it. But why trade? Because the energy you spent specializing your knowledge means you have no time or ability to grow your own food; you must trade. So you build an extra table, and take it with you in search of people selling various foods. But, if you are not sure where to find these people, you risk starvation wandering through the wilds.
So to trade at all, you need around you a community of people you know are making/growing things you can’t, because you have specialized in X. You take this ‘risk of specialization’ because you know for sure others are specializing their knowledge, and rely on you as you rely on them. Without this foundational trust trade is impossible. First community, then specialization, then trade. Not, as neoclassical economics would have it, so; first competition, then trade, then trust … maybe … someday, after I've maximized my personal interest.
“Central to [the] problem is the assumption that when asked a question, the individual gives an answer which will maximize his personal gain. How good is this assumption? I doubt it is very good. “Where is the railway station?” he asked me. “There,” I say, pointing to the post office, “and would you please post this letter for me on the way?” “Yes,” he says, determined to open the envelope and check whether it contains something valuable.
Amartya Sen quoted on p99 in “Econned,” Yves Smith.
Right off the bat we see trade cannot be ‘free,’ whatever ‘free’ really means. Trade inherently requires deep trust and interdependency, and is an inescapable consequence of specialisation (prior to abundance). It is complex, involved, embedded in community and custom, can only be free of, or uninfluenced by, those factors which are irrelevant to it. Trade implies, in its simplest form, cooperation, which requires agreed rules. The competition associated with trade arises when people specializing in what you do, trade where you trade. Like all things, this is ‘good’ and ‘bad.’ ‘Good,’ because it can motivate improvements in quality and prevent monopoly/oligopoly build up, and offer more choice, etc.; ‘bad,’ because it inspires cheating, cost cutting, keeping knowledge secret from the community to maintain competitive advantage, etc.
Naturally, the community trading in the early form of market here conceptualized shares a language and a religion of some form. Its members will therefore have similar sensitivities to fairness and just price, and fair knowledge about the labour of their trading partners – knowledge, though, which is far from full; by definition specialization makes “information asymmetry” inevitable.
This sketched community, because it is small, can establish relatively uncontroversial and simple laws, or rules of trade, that keep things more or less on an even keel. But change is the only constant, no matter how ‘free from interference' our market place is. As time moves on the trading sphere expands. Laws become increasingly complex as trade reaches out across cultures and religions and as media of exchange enable more complex trade. This ‘mission creep’ is inescapable, because, contrary to economics’ assumption of the total uniformity of all market participants (human beings), people are in fact very differently motivated and skilled, and reality is far beyond human control. Furthermore, there is an ever-present pressure to game the system (being rich is definitionally better than being poor), which means a corresponding requirement to ‘interfere’ in the market to ensure stability over time. That bears repeating; there is an ever-present pressure to game the system. Intervention of some kind or another is an increasing necessity, regardless of the inherent ‘intervention’ of establishing ground rules for even the smallest market, ground rules which themselves can only grow out of the soil of pre-existing cultural sensitivities.
So we come to intervention. What is it? I think of it like this; you can’t not interfere. For example, I’m walking along the riverbank and notice a drowning child. I can rescue her, because I’m a good swimmer. If I choose not too, am I intervening or not? My choice, whichever it is, affects the flow of events. I might feel guilty for the rest of my life if I don’t dive in, or, if I do, become a hero and marry my childhood sweetheart. Maybe the rescued girl grows up to be an actor. Maybe she becomes a murderer, and so on.
Doing and not-doing are both choices which have consequences. ‘Non-interference’ is a choice, a preference, a style if you will, with consequences which differ from its so-called opposite. That is to say, non-interference is an interference at the level of affecting outcome. ‘Non-interference’ is as much a conscious choice as ‘interference’ is, if there is awareness that a choice is to be made. If there is no such awareness, then there’s nothing to debate, nothing to talk about, no issue to address. The point becomes moot, the supposed dichotomy vanishes.
So what is ‘free?’ I honestly don’t know. People deploy the word when Pavlov rings his liberty bell, not fully sure why they’re drooling it out. I don’t believe anyone knows what a ‘free’ market really is. As soon as you start to describe such in detail, the ‘freedom,’ perceived dimly in the distance, evaporates like morning mist. The perfectly competitive market, that Camelot which in economic theory prevents the build up of market-manipulating power, has preposterous, supernatural properties, not one of which is even remotely possible in the real world.
And thus I have absolutely no idea what a ‘free market’ is, or could be. I have not answered my own question. Epic fail. Yet I cannot accept the claim that an unplanned, unmanaged market is 'free,' or even that there can be such a thing. There is always planning, there is always management, and with money running the show, there is always concentrated power lobbying the playing field in its favour. Interference is the name of the game, and it's no surprise that the side in control of the MSM frames the debate. Bleat after me: "Freedom! FREEDOM! FREEEEEEDOM!!!"
A cynical thought just struck. What if 'free markets' are insisted upon by those who benefit from the system. 'Free' could be code for 'keep you hands off my fucking money!' Hmmm … Could that be what Freedom™ is? Elite freedom from the mucky masses?
I just wanted these more mechanical points attached to this article:
1. At the heart of the economy is the money system. Free marketeers insist that only the market can 'know' how much money is the right amount, which means money must be produced for profit by private businesses, which means debt-money and interest, which forces growth. Growth must be perpetual or the system fails. Somehow money must be borrowed and borrowed and borrowed. When the consumer is tapped out, the market forces the government to intervene to save it: Government as Borrower of Last Resort.
2. Consumers are only as free as their purchasing power allows.
3. Marketing, advertising, public relations, propaganda (see The Century of the Self) are incontrovertible evidence that 'freedom' is a buzz word to defend a system designed to keep a particular group at the top of a particular hierarchy.